Oil & Gas Decommissioning

Inc. Langdon Seah | Hyder Consulting | EC Harris

ENSURING SUCCESSFUL DECOMMISSIONING AND ABANDONMENT OF OFFSHORE & ONSHORE ASSETSFeb 2017

© Arcadis 2015

Health and Safety First and ForemostARCADIS’ oil and gas team is committed to consistently delivering industryleading safety and technical leadership across the geographies we serve.

Safety Excellence Award: Chevron Environmental Management Company, 2009

Contractor Safety and Environmental Excellence Award: Marathon Oil, 2010

Safety Excellence Award: Chevron Environmental Management Company, 2011

Team Safety Recognition Award: Confidential Client, 17 months 100,000 hrs w/o Corporate Reportable, 2011

Team Safety Recognition Award: Confidential Client, 53,000 hrs w/o Corporate Reportable, 2011

Contractor Performance Award: BP, 5 years >5,000 hrs w/o Corporate Reportable, 2011

Supplier Safety Achievement Award: Confidential Client: 2009, 2010, 2011

Global Contractor Safety Council, Safety Champion Award: Shell, 2012 (3 Awards), 2013 (2 Awards)

2009 2010 20122011 2013

Flawless Safety Execution Award:Confidential Client (3 awards), 2013

Elite Contractor AwardMarathon for H&S performance, 2013

Supplier Safety AwardBP, 3rd year in a row for working without a recordable injury, 2014

Europe & South Africa SGW FDG Annual HSSE Award:Shell, 2014

2014

2

2015

© Arcadis 2015

I. Introduction to Arcadis Oil & Gas

II. Understanding the Decommissioning challenges

III. How Arcadis supports the Decommissioning Process

IV. Success factors – What we find

V. Where have we supported other organisations

Contents

© Arcadis 2015

ARCADIS – at a glanceK

EY S

TATI

STIC

S

GEO

GR

APH

IES

€2.8bnREVENUE

125YEAR HISTORY

28,000PEOPLEWorldwide

TOPIN WORLD10 TOP

IN EUROPE3 32%

36%

36%

Emerging Markets Europe

North America

ARCADIS is the leading global natural and built asset design and consultancy firm providing consultancy, planning, architectural design, environmental, engineering and premium management services across all markets

ARCADIS supports our clients during every step of the O&G value chain from exploration & production, refining, transportation, and marketing with integrated environmental, water, infrastructure and program management expertise throughout the asset life-cycle

.

© Arcadis 2015

Every day, 3,000 Arcadians support our Oil & Gas clients

Core Oil & Gas Services Environmental Management

Remediation & Decommissioning

Productivity Improvement

Project Management & Cost Management

Enabling Infrastructure Works

Asset Maintenance

HSSE, Process Safety

600O&G Production Facilities

50 refineries & terminals

150 pipeline sites

Our experience includes :

© Arcadis 2015

ARCADIS supports our oil and gas clients during every step of the O&G value chain from exploration and production, refining, transportation, and marketing A selection of our global IOC, NOC, and regional oil and gas clients include:

© Arcadis 2015

With over 65 years of experience with the oil and gas industry,ARCADIS supports our clients during every step of the asset lifecycle

Facility Infrastructure

Product Storage and Transportation Systems

Piping, and Delivery Systems

Instrumentation, and Control

Project Management Services

Engineering & Design

Construction Management

Cost Management & Claims Support

Safety & Risk Management

Planning and Strategy Development

Data Acquisition

Information Management

Site Investigation

Remediation

Demolition

Restoration

Decommissioning

Portfolio Approaches

Asset Management

Asset Integrity

Operational Efficiency

Project Services

Contract Management

Cost Management

Supply Chain Solutions

Process Safety Management

Regulatory Compliance

Health & Safety Services

ENGINEERING & CONSTRUCTION

OPERATIONS & MAINTENANCEFRONT END

PLANNING

Oil Field Development Programmes

Due Diligence

Feasibility Studies

Business Planning

Preliminary Engineering

Cost Estimating

Planning & Permitting

Project Development Support

Safety & Risk Management

ASSET RETIREMENT

© Arcadis 2015

Why Arcadis?

Engaged as a global environmental partner by 4 of the top 5 oil companies for Environmental Strategy, Planning & Assessment

Leading Project Cost Management company in Asia… saving over 15% on CAPEX costs for our Oil& Gas clients on major projects

Managed and delivered the successful end-to end decommissioning of over 24 challenging wells in North America plus many other projects globally

Currently engaged in UK North Sea largest Decom Project (Brent)

Developer of innovative environmental strategies for offshore structure decommissioning

Environmental partner for worlds leading oil companies

Expert in Cost Management

Deep O&G Decom Experience

Involved in the largest Decom projects

Thought leader in Decom Strategies

© Arcadis 2015

What are the Challenges?Major capital projects are not easy to deliver...

64% of projects face cost overruns 73% of projects are reporting

schedule delays

Source: Ernst & Young Spotlight on oil and gas megaprojects 2014

Decommissioning Projects face even greater uncertainties with rapidly evolving regulatory frameworks, highly public visibility, lack of experience, challenging environments……

© Arcadis 2015

Decommissioning in SE Asia faces a number of specific challenges … (1)

Abandonment / decommissioning of onshore wells and offshore facilities is fast becoming a critical issue in SE Asia. It is estimated that over 100 on-shore wells currently need to be sustainably abandoned in Sarawak & Borneo alone ; and over 400 offshore structures and their associated wells are expected to be decommissioned over the next 20 years in Malaysia and Borneo. Similar needs are developing across SE Asia.

Thought leadership will be required to assist in developing environmentally and economically sustainable strategies to ensure that this issue can be managed responsibly.

Arcadis look forward to the challenges ahead. Together we can ensure that we leave a sustainable legacy for future generations.

© Arcadis 2015

Decommissioning in SE Asia faces a number of specific challenges … (2)

Developing Regulatory Environment : Multiple stakeholders at national, state and local level in SE Asia; potential conflicting interests. Absence of well developed Regulatory frameworks. Disparate environmental expectations/standards eg from IOCs and local regulators

Cost Estimation : the paucity of decom project experience in the region can lead to in-accurate Decom cost estimation

Lack of Decom Experience : this is a relatively new sector for the industry and local and regional companies lack experience and capability. Need to build a local decom indutsry

Minimising Cost : Completing the Decom process at minimum capital cost requires an optimal Decom strategy and effective project and cost management

Decom Strategy : selecting and implementing the best Environmentally Sustainable and economically viable solution requires a deep understanding of the environmental issues and alternative approaches combined with strong project governance

© Arcadis 2015

Potential IMPACTS to Your Business?

Insufficient consideration of environmental,

social and economic issues

can result in substantial but

avoidable project delays and cost

overruns

© Arcadis 2015

Arcadis Decommissioning services provide a comprehensivesolution

Integrated environmental, engineering,

advisory and commercial

services

Improved investment

decisions and anexpedient receipt of

development permits

Anticipate and manage

increased stakeholder expectations

Secure and maintain the

social ‘license to operate’

Consider likely issues across the

whole decom project life cycle

Fully developed

business case; strategy to retain

permits; and an exit plan

in place

Go beyond regulatory

compliance

Manage your reputation

Detailed understanding of stakeholderrequirements

Ensure project viability

Combine global resources with local market

knowledge and presence

Reliable on the ground delivery

Trusted partnerwith detailed

understanding ofyour business

Actionable andunambiguous

advice

Knowledgeshare andinnovation

Deliver cost effective

and fastersolutions

Early strategic consideration

of likely environment

and economic challenges is a low cost, high impact activity

© Arcadis 2015 May 1, 2023Deccommisioning VP - Arcadis 14

Decommissioning – Arcadis Proposition

Stakeholder Needs

PRODUCTION CESSATION MANAGEMENT

VALUE & COLLABORATION

RELATIONSHIP MANAGEMENT

LEGAL LEGACY & STATUORY COMPLIANCE

BRAND REPUTATION

PROCUREMENT AND CONTRACT SUPPORT

RISK ALLOCATION/OPTIMISATION

SCHEDULE & PROGRAMME

REPEATABILITY & LESSONS LEARNT SAFETY ENVIRONMENTAL

COMPLIANCE

CERTAINTY (Time & Cost)

© Arcadis 2015 May 1, 2023Deccommisioning VP - Arcadis 15

Legally Brand Reputation

STAKEHOLDER NEEDS : DELIVER THE DECOMMISSIONING PROGRAMME SAFELY WITH INCREASED CERTAINTY,

VALUE & REPUTATION INTACT

Risk allocation /

OptimisationCertainty

• Understanding of Legal and statutory obligations

• Recognised by Authorities as industry leader

• Experience/ Expertise dealing with Government organisations and relevant bodies.

• Proven record in delivering complex decommissioning programmes

• ARCADIS share value linked to delivery

• Scale in market

• Willing to share risk by linking Brands

• Global No.1 in remediation

• Scope definition

• Data sets and knowledge

• Contracting strategies

• Estimating knowledge and systems

• Risk Management

• Tech Knowledge

• $931m of projects

• Supply chain knowledge

• WAN’s & Productivity knowledge

• Asset Condition surveys

• Environmental Capability / History

• Contracting strategy & Solutions – PDCC Decoupled contract

• Performance Based Contracting e.g. and Project Foxglove, GRIP®

• Project Controls

• Programme & PM experience and processes

• Experienced Risk managers and industry recognised process

Safely

• Health & Safety embedded in our culture and approach

• Environmental experts

• Onshore HSE / CDM experts

• Breadth of knowledge and cross capability

• Proven record

• Awards

• Global safety systems

Schedule

• Knowledge & data sets

• Planning

• Productivity Measurement & Enhancement

• WAN’s

• Streamlined contracting strategies to optimise time

• Front end engagement models

• Knowledge of permitting

Value

• Cost Estimation

• Optimised cost management

• Safe pair of hands

• Programme partner committed to long term

• Recycling and resale of equipment

© Arcadis 2015

Decommissioning of Offshore Structures

EnvironmentalOptions Study

DevelopEnvironmentalManagement

Plan

StakeholderEngagement

Pre, During& Post

EnvironmentalStudies

Advocacy & Reporting

Remedial &Restoration

Recommend-ations

Cost Estimation

Programme & Project

Management

3 Activities are critical to the execution of successful Decom Project :

• Environmental Options Assessment

• Environmental Management & Technical Services

• Project Management Services

Cost Management

© Arcadis 2015

Offshore Facilities Decommissioning Project Management• PMO/portfolio

management• PMC• Project scheduling• Field Monitoring and

HSSE Oversight• Report day-to-day

operation• Risk Management

Cost Management• Cost estimation &

benchmarking• Quantity Surveying• Cost monitoring and

control• Contract Strategy &

Management• Claims and variations

avoidance and management

Develop Environmental Management Plan• Environmental

Impact Assessment• Environmental

Baseline Study

Pre, During & Post Environmental Study• Pre, During and Post

completion Site Environmental Monitoring and reporting

Remedial and Restoration Recommendation• Provide

environmental options and recommendation for remedial and restoration of site

Environmental Option Study• Conduct

decommissioning option study

Stakeholders Engagement• Identify and engage

stakeholders on decommissioning study, program and activities

Advocacy and Reporting• Compliance to

regulatory requirement and legal framework for transfer of removed and abandoned facilities

• Data update and reporting of “new site”

• Legal documentation


Environmental Management & Technical Services

May 1, 2023 17

Environmental Options Assessment

3 Critical Activities to ensure environmentally sustainable decommissioning at minimal economic cost

© Arcadis 2015

Decommissioning of Onshore Structures

AgencyConsultation

Develop &Implement

EnvironmentalManagement

Plan

Reporting

Develop Planfor Site

Condition Control

Advocacy

DevelopPlan forAccess

Cost Estimation

Programme & Project

Management

3 Activities are critical to the execution of successful Decom Project :

• Environmental Options Assessment

• Environmental Management & Technical Services

• Project Management Services

Cost Management

© Arcadis 2015

Onshore Facilities Decommissioning Project Management• PMO/portfolio

management• PMC• Project scheduling• Field Monitoring and

HSSE Oversight• Report day-to-day

operation• Risk Management

Cost Management• Cost estimation &

benchmarking• Quantity Surveying• Cost monitoring and

control• Contract Strategy &

Management• Claims and variations

avoidance and management

Develop Environmental Management Plan• Environmental

Baseline Study• Pre, during and Post

Environmental Monitoring

• Site Environmental Remedial and Restoration

Develop Plan for access• Route access roads

around sensitive receptors

Develop Plan for site Condition Control• Erosion and

sedimentation control, spill control

• Well Plugging Design

Agency Consultation• Engage stakeholders

on well plugging program and activities

Advocacy• Ensure compliance

to regulatory requirement and legal transfer of site to owner complete with reports

• Acceptance of well plugging design and completed well plugging report

Reporting• Well

Reconnaissance• Completed well

abandonment inspection report

• Legal documentation


Environmental Management & Technical Services

May 1, 2023 19

Regulatory Framework and Advocacy

3 Critical Activities to ensure environmentally sustainable decommissioning at minimal economic cost

© Arcadis 2015

Where have we done this before?Selected profiles from our hundreds of projects worldwide

© Arcadis 2015

Offshore Asset Decommissioning

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ImagineIn Depth Study into the impact of artificial offshore reef creation using abandoned Offshore Oil & Gas Structures

ApproachMulti-year study to determine the health, development, and maturation period for a new artificial reef to provide data to O&G offshore Decom sector

WHY – The oil industry needs to have solid data that demonstrates that leave-in-place options provide a positive environmental outcome, and that reefs can be part of the available options with a net benefit.

Result

Oil production structural material can effectively be left on the sea floor and converted into a viable and productive reef.

Bird Island Reef DevelopmentNetherlands

Report for : • National Conference on Ecosystem Restoration• SETAC Europe – Special Session on Offshore

Abandonment• Ecological Society of America/Society of Ecological

Restoration

Roost Completion

Before Demolition

© Arcadis 2015

Offshore Asset Decommissioning

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ImagineIncrease the productivity of offshore decommissioning activities through improved work estimating and scheduling process for a major production asset in the UK North sea

Approach Development of Work Activity Norms for

offshore topside decommissioning work disciplines

Assessment of contractor productivity using Time on Tools Approach

Identify & implement approached to improve productivity

Refine decom project scheduling using refined Norms & known productivity levels

Result Work Activity Norms for Offshore

Decommissioning Improved productivity for Decom work Will lead to reduced cost and reduced

time for completion of the project

Major Offshore Production Assets Decommissioning Productivity Assessment & Improved work Scheduling

UK North SeaClient Confidential

Before Demolition

© Arcadis 2015

Ecological re-use of abandoned platforms

Offshore Platform Abandonment Strategy : Arcadis ERAP StrategyUK North Sea

ChallengeMany old offshore platforms on the North Sea Continental Shelf must be dismantled. Dismantling is very expensive and risky. Is there an alternative with lower risks and costs? Our idea Do not dismantle the platforms, but re-use them ecologically. This will help the Marine Strategy Directive and is much cheaper and less risky than dismantlingWhat’s the ecological advantage? The North Sea floor is mainly sandy. Several species benefit of hard substrate environments (e.g. benthos, fish). On hard substrate spots in the North Sea, like ship wrecks, you find a wealth of species. So hard substrate structures in combination with a sandy environment leads to higher biodiversity. Changes and risks The ERAP concept offers a effective solution for dealing with abandoned platforms. It enhances the ecosystem diversity and help to obtain a good environmental status. Next to ecological value a platform can have multiple uses, like diving, fishing, research, international cooperation, and governance.

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© Arcadis 2015

Offshore Environmental Assessments & Planning

Over 50 Arcadis Environmental Assessments & Planning for the Oil & Gas sector on Asia

SummaryThe Arcadis Environmental team have completed over 50 engagements for oil & gas projects in Asia, including : Environmental Impact Studies Quantitative Risk Assessment Environmental Planning Baseline Environmental Surveys Permitting

Andaman Sea One example is our work for ENI where we were responsible for conducting Environmental Impact Assessment studies, Quantitative Risk Analysis and Emergency Response Planning for ENI India’s offshore drilling operations in AN-DWN-2003/2 block, Andaman Sea. Major tasks included:

Collection of Secondary data, Preparation of Environmental Management Plan Quantitative Risk Assessment Formulating the Emergency Response Plan

An important element of the project was oil spill modelling in the form of OILMAP and HYDROMAP and contingency planning

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© Arcadis 2015

Offshore Project Cost Management

Cost Management for project work for over 200 offshore structuresClient Confidential, SE Asia

Arcadis have been providing ongoing cost management for over 10 years for a portfolio of over 200 offshore production structures for an lnternational Oil Company in SE Asia

The scope covers Cost Estimating, Cost Engineering & Quantity Surveying services for a wide range of projects including new build, brownfield, life extension, maintenance and decommissioning.

Outcomes• Overall cost of projects reduced by 15-

20%• Through the work, Arcadis has built up

an in-depth knowledge base of offshore oil & gas project costs in SE Asia, particularly for East Malaysia & Brunei.

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© Arcadis 2015

Well Abandonment

On Shore Well Abandonment

Confidential Client Netherlands

ImagineRemediation of an old oil production site in the Netherlands, overcoming severe groundwater contamination issues and soil contamination

ApproachARCADIS managed the remediation of the site, overcoming major issues with soil contamination with petroleum products, mercury and arsenic.

ResultARCADIS successfully completed the project, gaining substantial regulatory and client satisfaction with the remediation.

© ARCADISMay 1, 202326

© Arcadis 2015

Well Abandonment

Well Abandonment24 Wells, USA

Confidential Client,Pennsylvania, USA

ImaginePlugging Program Management – Manage the Quaker State Legacy Oil Well Plugging Program on Behalf of Shell

Approach• Project Management• Health and Safety Management of

Subcontractors. Share Learnings Between Downstream and Upstream Programs

• Due Diligence- Determine Plugging Responsibility,Research Historical Production Records, Sales Agreements, Lease Documents, Maps, and Interviews WithFormer Employees.

• Subcontractor Procurement and OversightResultARCADIS completed the plugging program and gained confirmation from the Pennsylvania Department of Environmental Protection that all plugging and site remediation activities had been completed satisfactorily.

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© Arcadis 2015

Well Abandonment

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From this ..

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Arcadis managed the entire program from identification of well locations through to site restoration and regulatory approval

© ARCADISMay 1, 202329

CONTACTS

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dd +6 (0) 3 2106 8168m +6 (0) 1 2712 5076e [email protected]

ArcadisLevel 5, Menara TSR | 12 Jalan PJU 7/3, Mutiara Damansara | 47810 Petaling Jaya | Malaysia

SYED MAHADZIRHead, Cost Management, Malaysia

dd +6 (0) 3 2106 6032m +6 (0) 1 3350 0038

e [email protected]


DR IAN KENNEDYHead, Oil & Gas, Asia

dd +6 (0) 3 2106 6099m +6 (0)1 9815 4557e [email protected]


JERRY SIRAN LANGANSenior Consultant, Oil & Gas Decommissioning, SE Asia